Summer Interns – It’s That Time of Year Again

With Memorial Day weekend, the unofficial start of summer, fast approaching, it’s a good time to go over the rules regarding the use of interns.  Nothing of significance has changed since my post on this subject last year, but it never hurts to refresh one’s memory, as a business that violates these rules can find itself in trouble with the U.S. Department of Labor (the “USDOL”) and potentially, the IRS.

The issue that poses the biggest risk of trouble for an agency is whether an intern will be compensated and if so, how much compensation they will be paid.

If an agency does not want to pay an intern for their services, the burden is on the agency to prove that the intern is a “trainee”, who does not have to be paid anything for their services, and not an “employee”, who must be paid at least the minimum wage for their services.  The same burden must be met if the agency wants to pay an intern less than the minimum wage for the hours worked by the intern.  That burden is higher for an agency or other profit-making business because the USDOL, which is responsible for enforcing the minimum wage law, will presume that such an intern is an “employee”.   The USDOL has issued a Fact Sheet in which it establishes six criteria that must be met to prove an intern is a “trainee.” (Click here for an article I have written that discusses those criteria.)  The bottom line is that if the agency derives any significant benefit from the services of an intern, that intern will most likely be considered an “employee” by the USDOL for purposes of the minimum wage law.

It does not matter that the intern willingly agreed to perform the services in question without pay or for less than the minimum hourly wage, as the United States Supreme Court has held that an individual can not waive their rights under the minimum wage law. Thus, an intern could decide, up to three years later, that maybe they should have been paid the full minimum wage for all the services they performed for the agency.  A successful claim could result in the intern receiving up to twice the amount of compensation they should have been paid and will result in the agency paying the intern’s attorney fees and other expenses of litigation.

For an agency that is considering hiring someone who is under 18 years of age, both the federal and state governments impose restrictions on the types of activities in which such a person can engage and for how long each day, regardless of whether they are a “trainee” or an “employee.”  The main difference between the two sets of restrictions is that Georgia law requires a person under 18 to get an employment certificate, or work permit, from the school they last attended or the local county school superintendent.  (Click here for a fact sheet from the USDOL on this subject and here for a summary of the restrictions imposed by federal and state law from the Georgia Department of Labor.)  For agency owners who want to give their children a taste of what it’s like to work in the agency, only the restrictions on prohibited occupations will apply.

A summer internship can be beneficial for both the intern and the agency, but to avoid trouble, the agency needs to know and follow the above rules.

BEST WISHES FOR A SAFE AND ENJOYABLE MEMORIAL DAY WEEKEND.

Employment Termination Notice Periods – Are They Enforceable? (Part 2)

My last post addressed the enforceability of employment termination notice periods from the perspective of the employer.  Unfortunately for the employer, when an employee quits without providing the required notice, there is not much the employer can do beyond prohibiting the employee from acting contrary to the interests of the employer during the required notice period.  Is an employee who is fired without being given the required prior notice in a similar position?

The answer depends on what effect a termination of the employee’s employment has on their right to receive post-employment compensation.  The Georgia appellate courts have held that the failure of an employer to give the required notice of termination to an employee entitles the employee to sue the employer for breach of contract.  But the employee’s only remedy is payment of the compensation and other benefits that would have been paid or provided to them during the required notice period.  The employee cannot get their job back.  However, such a breach of contract by the employer will void any provision in the employment agreement that restricts the right of the employee to receive compensation they have already earned after their employment terminates.

In one case, the Georgia Court of Appeals refused to enforce a provision in an employment agreement that limited the improperly terminated employee’s right to receive commissions for sales made to those that were received by the employer within 10 days after the termination of the employee’s employment.  In another case, the Court of Appeals refused to enforce a provision that reduced the amount of commissions the improperly terminated employee was entitled to receive after their employment was terminated.  Any attempt to avoid the payment of a bonus or other compensation that involves the improper termination of an employee will also fail.

Since an employer will have to pay an employee the compensation and provide the benefits the employee would have been entitled to receive during any required termination notice period, there is no reason not to take advantage of such a period to do what can be done to make the employee’s departure as painless as possible.  Where there are contractual provisions that restrict an employee’s right to receive compensation they have already earned after their employment terminates, it is imperative that any required notice of termination be properly given.  If it is not, those provisions will not be enforceable against the employee.

 

Employment Termination Notice Periods – Are They Enforceable?

There was an article a few months ago on HR Daily Advisor about what to do if an employee quits their job without giving any prior notice.  In the absence of a written agreement to the contrary, there is no requirement that either an employer or employee give prior notice of their intention to terminate the employment relationship.  That is the basic meaning of “at will” employment.  Either side can terminate the relationship at any time for any or no reason (as long as the reason is not one prohibited by law).

As the article points out, when an employee quits without notice, it can cause many problems for the employer, some of which may result in extra expense.  When I prepare employment agreements for my clients, I always ask if they want to require the employee to provide prior notice before they can terminate their employment.  Having such notice can allow for a smoother transition by giving the employer time to find a replacement, or reallocate duties among the remaining employees if no replacement will be made, before the employee leaves.  For those employees who are in sales and have significant customer contact, it can give the employer time to contact the customers who will be effected and introduce them to another contact person at the employer.  This will give the employer a better chance of maintaining the customer relationship after the employee leaves.

So what are an employer’s options if an employee quits working without providing the contractually required prior notice?  While that would be a breach of contract by the employee, the employer’s options are limited.  The 13th Amendment to the U.S. Constitution and Georgia law prohibits forcing the employee to continue working during the required notice period.  However, the employer would have a cause of action against the employee for any expenses it incurred as a direct result of not being given the required prior notice and may be able to use the employee’s breach of contract to avoid paying any compensation that would otherwise be due the employee after the termination of their employment (e.g., bonus or severance pay).  This does not extend to withholding payment of compensation for work that has already been done.  The proverbial “last paycheck” should not, as a general rule, be withheld from the employee, as the employer would risk violating the Fair Labor Standards Act and related Georgia laws.

An employee who fails to give the required notice can still be considered an employee of the employer during the required notice period.  As such, they will have a duty not to do anything that would be harmful to the interests of the employer.  This duty can be used by the employer as a basis to prevent sales employees or others who have significant customer contact from contacting its customers during the notice period or to sue such employees who do act contrary to the employer’s interests during that period.  It is generally easier to prove a violation of this duty than of a non-solicitation or non-disclosure covenant.  However, to make use of this duty, the employer must be willing to pay the employee their normal compensation for the notice period.

While an employer’s options for dealing with an employee who does not give the required prior notice of termination are limited, the existence of such a requirement can be helpful to the employer in the vast majority of cases where employees abide by the requirement.